Can you tell us a little about your background and what led you to start Kwil?

I have always been pretty entrepreneurial. When I was 13, I made money by arbitraging items in a popular video game and managing payments through PayPal. What began as a couple of bucks on the side turned into a decent amount of money and ended with me getting banned from PayPal for violating their ToS by lying about being 18 (they let me keep the money, but to this day, I am still banned).

When I was 16, I started a company that did landscaping and excavation work in the greater Boise area. After briefly mowing lawns and pulling weeds, I evolved the business to handle more complex (and higher profit) tasks like rock beds, irrigation lines, and demolition. Over the next three years, I grew this company to 14 employees.

In 2020, this business stopped after a white-water kayaking accident resulted in me being medevaced to the ER. While on my hiatus from manual labor, I spent my time pursuing a passion I had recently picked up in my first year of college: programming. I spent a lot of time over the next eight months creating projects I thought were cool: financial derivatives analysis, web scraping, and even natural language processing applications.

In Fall 2020, I took a gap year from my (then online) university and took an internship with a general contractor. Throughout this internship, I spent countless hours continuing my passion for programming, many weeks working the minimum hours at my job so that I could write code instead. During a particularly slow day on the job in December 2020, I went to Barnes and Noble on my lunch break and bought a book on Solidity. A month later, I found my way into the Arweave ecosystem while trying to build a decentralized social protocol and got invited to present what I was working on at their first ArConf. It was there that Rob Chan from 4SV would come to me looking to write an angel check, resulting in me leaving my internship early to focus on building Ecclesia/Kwil.

Talk about the original product visions for “Ecclesia” and “Kwil Social”? Why did you ultimately decide to focus on building infrastructure instead?

Ecclesia originally started as something I was building for fun. Once I received some funding and knew I had to make it a business, I began looking for a problem it could solve. Initially, I set my sights on censorship resistance. I began with basic blockchain immutability but eventually tried to implement HTTP tunneling technology to allow access in countries that faced government censorship.

Unfortunately, it’s extraordinarily challenging to build a business on that premise. Next, I found myself trying to make the social application a DAO communication platform (pitched as an alternative to Discord). At this point, we made the decision to rebrand to Kwil, and adjusted our branding to be more playful, aiming to appeal to the DAO audiences we targeted. It was really a solution in search of a problem, and frankly I did not understand the needs of the customers I was targeting.

By October 2021, Kwil Social struggled to get meaningful traction with some of the DAOs that had agreed to be our first cohort. Users occasionally came on the platform and made a post, but generally they continued using Twitter, Telegram, and Discord for their communication. I was desperate for any meaningful traction to validate that we were building something valuable.

While on a call with a DAO building an NFT art gallery, I could tell they were not interested in using our product, so I began shifting the conversation to see if there were other needs I could pinpoint and build features to solve. As one of their engineers was covering their architecture, I asked why had decided to build on AWS instead of building on a decentralized platform. They informed me that they had tried Arweave and Filecoin but could not store and query their data in the ways they needed. Desperate for some meaningful use, I brought up how we had built a basic database layer on top of Arweave and asked if they would be interested in using it. They agreed to try it and became the first users of Kwil the database.

For the next six weeks, we continued with social being our main product. After the six weeks, we reflected on how we were still largely unable to convince even smaller DAOs to use the platform and yet had many other projects who came to us asking to try the database. We officially pivoted shortly after that, and it has undoubtedly been the best decision we have ever made.

Can you talk through the data storage and indexing issues in Web3 today?

Currently, it is nearly impossible to build highly performant, truly permissionless applications that contain complex user functionality. Many Web2 technology products we consume are powered by robust data stores that enable intricate data to be managed seamlessly. In Web3, this simply does not exist. While blockchains like Ethereum and Solana enable key-value stores, and Arweave and Filecoin act as high-capacity file systems, there is no solution for managing complex data structures in a permissionless environment.

Generally, Kwil doesn’t do much for blockchain data indexing (however many of our partners do). The real breakthrough with Kwil is the ability to write data that coalesces around a single schema permissionless-ly. With smart contracts, the world witnessed the power of permissionless data writes and composability. Whether through a smart contract that enables token lending as a single application or an ERC20 contract that seamlessly incorporates into tons of applications, DeFi thoroughly proved the unique value of permissionless data writes. Because Web3 is expanding to more data-intensive sectors like social, science, and gaming, Web3 infrastructure also needs to support the data needs of these new verticals. The role of Kwil is to support the complex data structures required by these new applications.

Describe the vision for the Kwil protocol and how it simplifies the decentralized application development process.

Although Kwil is built for complex data sets, we believe that the process of managing such datasets does not need to be complex. Kwil is building something that doesn’t have existing counterparts in Web3. In building this unique offering, our goal is to make it as easy as possible to build on Kwil. A great model for how this has been done previously is Solidity.

When you first learn Solidity, it can be slightly confusing. Solidity has new concepts, rules, and best practices that are not common in other languages. However, once these concepts are understood, developing smart contracts is easier in Solidity than in almost any other language. Anyone who has written a complex smart contract in Solidity and then tried to write an equivalent in JavaScript knows that it is unexpectedly hard to produce the same result.

Solidity is so much easier to use because it is not just a language, but a tool for building smart contracts, which are an entirely new type of application. It contains features like contract inheritance, function modifiers, and require/assert statements that make Solidity uniquely effective at building permissionless applications and fulfilling the value of Ethereum. It is certainly possible to build the functional equivalents in other languages, but it is more complicated than in Solidity. In this same way, while Kwil does require some initial overhead in learning how to utilize it properly, it ultimately makes it easier for developers to create new types of applications enabled by it.

Why the decision to focus on SQL (Structured Query Language)? Why does SQL make the Web3 development process feel more native to Web2 developers?

SQL databases make up 60–73% of production databases in Web2. For a developer coming from Web2 and looking to take part in building the next version of the internet, it’s important to have familiarity when they are building their applications. While DDL on Kwil has its own unique language (we are aiming on releasing it this year), querying data from Kwil can be done with traditional SQL, making the application development process much more efficient and intuitive.

Why is the mass adoption of decentralized technology partially dependent on the ability to provide frictionless developer experiences?

The single most important aspect necessary to drive Web3 adoption is building phenomenal user experiences. Products need to be quick, intuitive, and secure. Currently, too many Web3 products suffer from poor consumer experiences. Whether it be something complex like the risk of wallet hacks and loss of consumer funds or simply requiring a user to keep track of a mnemonic and use a browser extension, Web3 has a serious UX problem.

The only way to solve this issue is with great engineers. While designers, product managers, and marketers all have a role to play, it’s ultimately the job of engineers to build solutions to fix the poor UX that is endemic in Web3. In order to encourage these developers to make the jump to build in Web3 and to ensure that their time is well spent, infrastructure companies must provide great developer experiences. Companies should not just focus on shipping innovative technology but need to emphasize building full products. Documentation, extensibility, and technical support play a huge role in encouraging the adoption of a product.

How does data composability fit into this picture, and what does composability ultimately unlock?

One of the key breakthroughs in Web3 technologies is composability. Whether through smart contracts on Ethereum, Permaweb applications on Arweave, or databases on Kwil, the ability for developers to use each others’ work as building blocks is an advantage that cannot exist in Web2. Being able to permissionless-ly plug into both applications and the data moats surrounding them using only a few lines of code is an extremely powerful force for encouraging technological collaboration, as it disincentivizes destructive competition and makes constructive collaboration trivially easy.

A great way to think about data composability is to view it as the next iteration of open-source technology. The biggest issue with open source is that it lacks foundational incentives for maintenance and upkeep and encourages free-riders to utilize software while contributing nothing back. While open source allows developers to plug into existing code, data composability also allows them to plug into the data already tied to that code, while still mandating that they pay for protocol usage like anyone else. Since so much of software’s value is held in an application’s data, permissionless data composability means that external users are more intimately aligned with the incentives of the underlying software and community.

What are some of the most compelling use cases for Kwil?

One of the most compelling use cases for Kwil is in decentralized social applications. There are few industries with such asymmetric value capture as social media/content creation, and I believe Web3 is the perfect technology to solve this. Currently, Kwil is working with social projects covering various subject areas, including social graphs, messaging applications, and interest graphs. Many of these applications prioritize returning value and rights to the consumer, effectively removing the incentives for abuse that exists within the social sector today.

Another sector that I am personally excited about is decentralized science. Many inefficiencies currently exist in research due to unnecessary middlemen and the incentives surrounding research funding. Some really cool decentralized science projects are aiming to remove these antiquated middlemen and provide alternative incentives for research and study replication. While this is an area that I am really excited to dig a bit more into, there are already a couple really awesome projects in stealth that we are working with who have a deep understanding of these issues and some truly innovative solutions for them.

Can you talk about the rest of the team and who is building this alongside you?

The Kwil team is an awesome mix of young, fresh-minded builders and senior, deeply-knowledgeable industry veterans. Our team is in-person in Austin, Texas, which has allowed us to move quicker and develop a strong team culture.

My older brother, Luke, has been working alongside me and brings many of the skills that balance my own. While I tend to be a bit more on the rebellious side, Luke is the type to color-code his sock drawer. This dichotomy of personalities has been critical to our success thus far, with Luke dealing with anything related to operations, finances, legal, HR, or accounting.

Also on the team is Luis, a college classmate who I enlisted to help me expand our user base. Growing up around serial entrepreneurs, Luis has a passion for building innovative products and solving hard problems. Mixing this with his prior experience in business development for database companies, Luis has become a critical part of day-to-day operations, handling everything from Kwil branding and external image, to user testing and G2M roadmap and execution.

On the more seasoned side of our team is our CTO, Randal. Randal has an extensive background in early-stage startups, cloud scale development experience in streaming, storage, messaging, and SaaS platform development more generally. After founding two startups that were both acquired, Randal spent 14 years as a VP of Development at Oracle. Randal is responsible for building critical pieces of infrastructure, especially regarding event-sourcing, concurrency, and system resiliency.

Finally, the fifth and most recent member to join our team is Bryan. Bryan has deep experience in building resilient microservices, and has been a leading engineer for both startups as well as large companies. Bryan is primarily responsible for the design and implementation of our cloud architecture, as well as building the Kwil DDL language.

Congrats on closing the $8.9M fundraise! How will the proceeds from the round be used to bring the Kwil vision to life?

Kwil is amply prepared to build aggressively over the coming years. While many companies are taking their feet off the gas and preparing for a potential recession, Kwil has the firepower to continue growing over the next several years; however, we can also be flexible with runway to allow us to withstand any sort of economic downturn.

The funds will go towards scaling the team as our customer market demands. If we find that growth is strong and we can quickly build a sustainable business model, we can grow the team aggressively. On the other hand if tech investment continues to cool off, and broader adoption of new technologies slows, then Kwil can keep our team nimble and resilient and grow at a more moderate pace that is in step with the market.

What does the Kwil team need to get right in the next 3–6 months?

I am extremely excited to release our next version of Kwil. Now that we have initial feedback from our first live version, we have built some phenomenal functionality that is truly unique to the industry. When these features launch in our next version, it is critical that we continue to listen to our early cohort of users to ensure that the features that we are building are needed and applicable to a broad market. The state of the Kwil product is still highly malleable and could continue to evolve in various ways. The next six months will be pivotal in solidifying our product direction as we respond to the needs of our users and look to expand the functionality available in Web3.

How can folks learn more about Kwil and use the protocol themselves?

The best way to learn more about Kwil would be to follow us on Twitter (https://twitter.com/KwilTeam) and join our Discord (https://discord.com/invite/n7SKUMQnAs). These are the first places we release news and information about the product.

As for how users can use Kwil, builders can find examples of how to use the MVP on our Youtube (https://www.youtube.com/channel/UC7byhahd6AZ0zPSjFX5NTlQ). Builders can also easily view databases with our DB visualizer at db.kwil.com. Since this is an MVP, we encourage builders to stay around for our next version, which will be launching in the near future. We are actively looking for beta testers, partners, and new team members to join us in building this foundational technology. The easiest way for any contact is to email info@kwil.com, or you can find me directly at brennan@kwil.com.

Our team could not be more excited about the direction we are going, and we look forward to building the future of the open internet with the rest of the Web3 ecosystem.

At DCG, we’re always looking for novel primitives that will unlock new use cases for blockchain technology. Soon after meeting the Odsy team, we recognized the potential for its dWallet ecosystem to meaningfully improve access control. We participated in the company’s $5M pre-seed fundraise to allow them to continue to build out a team of cryptography and cybersecurity rockstars that can execute on its bold vision.

To help us understand dWallets and the Odsy Network, we invited Odsy Network founder, Omer Sadika, to walk us through the vision.

Can you tell us a little about your background and what led you to founding Odsy? How did you meet the other founders? How did your path lead you to working on dWallets and the Odsy Network?

I started coding when I was 11 years old, and my experience and expertise for the past decade has been in the cybersecurity space, where I invented a new category called API Security and founded the first company in that category, which is now a unicorn. When I was very young, I was fascinated by Bitcoin, both by the technology and how it could change the world.

Looking at crypto from a cybersecurity perspective, it’s clear that there’s an access control problem. Users are forced to choose between poor decentralized access control and centralized solutions that provide access control but defeat the purpose of being decentralized in the first place.

Access control is so fundamental in our daily lives — from simple apps to financial products — that we take it for granted. Providing access control in a truly decentralized way, without relying on centralized solutions, is a huge challenge, requiring deep cybersecurity expertise and cutting-edge cryptography, a challenge I feel my path in life has destined me for.

David Lachmish and I have known each other for over a decade, and we had worked on a venture together for three years before Odsy. Sean Lee, the former CEO of the Algorand Foundation, met with us as part of our lead investor due diligence efforts, and we were so excited about working with each other that we decided to join forces. I then heard about Yehonatan Cohen Scaly through my cybersecurity network, a math genius and one of the top cybersecurity researchers working on a Multi-Party Computation (MPC) project at the time. I met with him, and right then and there, we knew we would be partners.

The dWallet Labs team has the most experienced and talented cryptographers and cybersecurity experts in Israel, with extensive backgrounds in both offensive and defensive cybersecurity, as well as modern cryptography such as MPC.

Can you talk through the issues with access control today and what spurred your interest in solving these problems?

Blockchains today offer a binary and rigid access control — your private key gives you irrevocable 100% access. That inelasticity, for any modern user, is unacceptable. Real-world use cases require robust, flexible, and dynamic access control, and that void had to be filled somehow. Centralized solutions, holding the keys and/or assets for the users became increasingly prevalent, in correlation with the rise of digital asset adoption.

But this is not sustainable. The merits of decentralization are squandered when access to crypto is managed in a centralized way, and the next phase of crypto maturity and adoption must leverage decentralized access control. As a cybersecurity expert, it is clear to me that creating decentralized access control is a great challenge — but one that has the potential to connect crypto to the real world and change the paradigm of what is possible with crypto.

As a side note, recent events are proving to us once again what happens to our assets and investments with centralized access — censorship, locked assets, and even effects that go back to hurting decentralized networks because of pooled assets with a small number of PoS validators. These are reminders that we should all strive for a more decentralized future for Web3.

Describe the concept of the dWallet and how it solves these issues with access control.

dWallets are a blockchain-agnostic primitive that serve as a universal access control layer for web3, enabling robust and dynamic access control without compromising on decentralization.

A simple way to think about them is as transferable, programmable signing mechanisms corresponding to specific public keys that live on a blockchain. Building the access control logic is done with Wallet Contracts, which are dedicated smart contracts for dWallets, they are Turing-complete and blockchain agnostic — so a transaction is signed based on a signing algorithm, for example ECDSA. Combining all of that results in a natively multi-chain, interoperable, and robust infrastructure.

Any access control logic one can think of is now possible in a completely decentralized and trustless way. I envision dWallets as the crucial infrastructure to enable the future interoperable multi-chain world.

What are the defining characteristics of dWallets?

First and foremost, the dedicated blockchain that enables dWallets must exhibit strong decentralization. That means that everything from the creation of the dWallet, to signing transactions with the dWallet, and the access control engine should be decentralized. Of course, the blockchain itself must also be fully decentralized. A network that has a small number of nodes or is not permissionless cannot support the dWallet primitive.

Second, the dWallet must be able to generate a digital signature for any valid message, regardless of what the destination or purpose are. So a dWallet that supports the ECDSA signing algorithm can be used to sign a transaction of any blockchain that uses ECDSA — which many popular blockchains do.

Third, the dWallet must have a Turing-complete and dynamic access control mechanism, and must strictly follow that mechanism when signing transactions.

And lastly, a dWallet owner must be able to completely transfer the ownership of the dWallet to someone else, and have their ownership revoked.

I’m most enthusiastic about the use cases that totally reimagine the way things are done today within crypto.

What are some of the use cases for dWallets that you’re most excited about?

There are many potential use cases for this new primitive, like decentralized retail and institutional custody, interoperable infrastructure for DeFi and gaming, and even a dWallet marketplace.

I’m most enthusiastic about the use cases that totally reimagine the way things are done today within crypto. One example is DAOs that will now become robust multi-chain organizations, capable of dealing with many real-world scenarios and live up to their full potential. Another example is self-custody — I’m very excited to see how dWallets are going to change the cold/hot wallet paradigm that has been in place since the beginning of crypto in new and exciting ways.

It’s also safe to say that some of the most imaginative and exciting use cases will be those coming from the community, utilizing the dWallet infrastructure to reimagine things and make crypto more connected to the real world.

All of this will lead to a reality where building interoperable protocols on top of the Odsy Network is as simple as building a smart contract on Ethereum.

How does the Odsy Network fit into this picture?

Odsy is a security-first network of dWallets — utilizing the power of dWallets combined with cutting-edge security to become the access control layer for all of Web3. Building a blockchain of dWallets requires both a specific design, multiple layers of security, and dedicated capabilities that will enable them in a very secure way.

The Odsy Foundation, a nonprofit organization based in Zug, Switzerland, initiated the launch of the Odsy Network and is dedicated for the further development of both the Odsy Network and the future Odsy ecosystem built around it, utilizing dWallets in different protocols and solutions.

Can you talk about the Odsy SDK and how you’re making it easy for developers to integrate Odsy Network functionality into their solutions?

The way the access control logic is built is by Wallet Contracts, wallet contracts are a new type of smart contracts, each one of them contains code that determines the access control logic of a specific dWallet. The process of utilizing wallet contracts will be simplified through the Odsy Wallet Contract SDK, allowing developers to simply write any logic they can come up with, and reduce the barrier for building complex decentralized access control mechanisms.

The Odsy Network SDK will allow developers to interact with the Odsy Network itself, and of course, it will also be used to interact with the wallet contracts that are written. All of this will lead to a reality where building interoperable protocols on top of the Odsy Network is as simple as building a smart contract on Ethereum.

Crypto founders should have more restrictions than traditional startups, not less, and we want to play our part in setting appropriate standards for crypto founders.

Can you talk about the rest of the team and who is building this alongside you?

The dWallet Labs team has the most experienced and talented cryptographers and cybersecurity experts in Israel, with extensive backgrounds in both offensive and defensive cybersecurity, as well as modern cryptography such as MPC.

I have met and worked with many technical leaders and cybersecurity experts, but Yehonatan, my co-founder and the CTO of the company, is without a doubt the only person I would want to lead the research and development of such an ambitious project. He has a deep understanding of large-scale threat modeling, and extensive experience with math and cryptography, which makes him perfectly suited to lead our research and development efforts.

Can you walk through the Nostos 10-year lockup model for the team and why you decided to take this approach as you embark on this ’10 Year Odyssey’?

We know that what we are building is a long-term project. We also believe that as part of the maturing of the space, crypto founders need to start thinking about their projects as long-term — 2 and 3-year vesting schedules are insufficient. Crypto founders should have more restrictions than traditional startups, not less, and we want to play our part in setting appropriate standards for crypto founders.

The name was chosen because of the Nostos theme, the main theme in the Odyssey, in which a hero must overcome obstacles and power through in a long journey until they finally get to their destination — and we believe nothing is more comparable to a founder’s journey than that theme.

What does the Odsy team need to get right in the next 3–6 months?

We are currently working on tailoring the state-of-the-art MPC to meet the unique requirements and needs of the Odsy Network. We also aim to lay down the foundations for the future Odsy ecosystem by developing the testnet and the SDKs — the Odsy Network SDK to interact with the network, and the Odsy Wallet Contract SDK to simplify the development process of new protocols utilizing dWallets on top of the Odsy Network. Most importantly, we need to get the right partners — we started off with the best partners we could ask for in the crypto space, and we need to keep that momentum going.

How can folks learn more about dWallets and the Odsy network?

On the project website — odsy.xyz — you can find our Litepaper and read more about dWallets and the Odsy Network, as well as Nostos 10-year lockup model and our token allocations.

When can they expect to be able to use the project themselves?

Developers should look out for our testnet and SDKs launch in the next few months, when they’ll be able to start building multi-chain interoperable protocols and leverage the new dWallet infrastructure. A few months later we expect to launch the first version of the mainnet, which will allow all Web3 users to finally use dWallets.

In the meantime follow our announcements on our official channels to stay posted!

Want to learn more about the Odsy Network? Visit their website at odsy.xyz and follow them on Twitter at @odsyxyz.

Looking to go full-time crypto? DCG companies are collectively hiring for 2000+ roles. You can search them at jobs.dcg.co

With the launch of its native token, $DG, and its DAO, Decentral Games has become a poster child for decentralized governance: it’s the first DAO to own, govern, and monetize virtual land, making Decentral Games a truly user-owned casino. Since its public launch on December 1st, $DG has appreciated more than 1500% and the DAO’s treasury is worth more than $6.2M. Most of all, owners make for engaged players: casino activity has accelerated and Decentral Games targets over a hundred thousand players by the end of the year.

In this feature, we bring you an interview with Decentral Games’ Founder & Project Lead, Miles Anthony.

Can you tell me a little about your background and what led you to founding Decentral Games?

I started my first venture when I was studying at UCLA in 2015. It was an ecommerce company that I launched and ran for two years. When I graduated, in 2017, I was deep into crypto, and became most interested in Ethereum, because of the potential to develop DApps on top of it. I was also actively investing in crypto projects and Decentraland was one of my favorites.

By 2019, I realized no one was addressing this obvious metaverse use case of multi-player wager-based games. We started Decentral Games with simple games like slots and roulette, and have progressively developed more complex offerings, with blackjack and texas holdem poker. With each game interaction, we create more engaging multiplayer experiences in the metaverse.

In contrast to traditional gambling where the house is pinned against the player, our model aligns all parties through the distribution and appreciation of the $DG token that governs the DAO treasury.

Tell us about the Decentral Games community.

Our community has a self-proclaimed “degen” identity. There is a crossover between the traditional crypto-native “degen” scene, NFT enthusiasts, general gamers or gamblers and our early token holders. As a whole, it’s a really fun atmosphere and that’s why people love socializing at our events.

How did the thinking start around launching a native $DG token?

The idea started to form last summer, after we raised our seed (equity) investment round in July 2020. We were inspired by DeFi projects that pioneered the concept of a community-governed DAO treasury that accrues value from a protocol’s fee generation. I thought it would be interesting to apply this model to a blockchain-based casino, combining it with a novel new play-to-earn model.

Casinos are highly profitable businesses, and with this token model structure, everyone involved in the ecosystem can benefit from the upside of the platform. As you play games, you are rewarded with tokens. In contrast to traditional gambling, where the house is pinned against the player, our model aligns all parties through the distribution and appreciation of the $DG token that governs the DAO treasury.

How did different $DG stakeholders react to the token launch?

Everyone reacted positively. $DG token aligns early investors, later round investors, the team, and players — and welcomes new community members to join us and become a part of the project. It allows more and more people to be invested, not just financially, but with their thought processes and ideas, in influencing the DAO.

Our narrative from Day 1 has been “Be the House.” The DAO makes that possible!

Are gamers more enthusiastic when they own tokens?

Definitely. To encourage players to hodl their tokens and keep the value in the ecosystem, we have been especially proactive in engaging the community. We now have over 1000 “hodlers”, so I feel that it’s my responsibility to update them. I push out a weekly newsletter to update everyone on our progress and get them excited about our events and development updates.

What are the defining features of the governance model?

Our narrative from Day 1 has been “Be the House.” The DAO makes that possible! Its focus so far has been on the management of the treasury funds generated by game fees. We have seen much higher governance participation rates than other DAOs. I attribute that to the financial aspect; people identify with the idea of Being the House and managing the house funds.

We have had different debates and proposals around economic policy, on topics like rewards rates for liquidity farming and gameplay mining. The DAO has only been active for 10 weeks and we have already had 25 proposals. There are people who came out of nowhere, bought up a lot of $DG and are highly active in rallying people behind proposals and getting them passed.

In the future, LAND management will be a key priority of the DAO. We put all our LAND (403 parcels) into it. The community will vote on new venues, games, and casino partnerships on the land. We also put the DG wearables into the DAO, so oversight and distribution of the wearables will be an important aspect. The DAO controls the entire digital asset ecosystem of $DG.

Has the DG team taken firm positions on votes?

Thus far, every team-submitted proposal has received a nearly unanimous vote. We haven’t submitted a proposal yet that received less than 95% yays. I guess the community trusts us to make good decisions!

We got to know every large $DG hodler who is active in governance, so, even before a proposal is submitted, there is open debate to incorporate feedback and make any necessary changes to get everyone on board.

Are there any voting guidelines?

A holder needs to have 1% of circulating token supply to issue a proposal. Each resolution must have more than 15% of the circulating supply voting “yes” to pass. So, even if a majority of voters approve a proposal, it won’t pass if it doesn’t reach the minimum engagement threshold.

What were the first governance votes?

The earliest votes were around liquidity rewards. For context, when we wrote the white paper in the summer, we were very generous with airdrops and rewards for the Balancer pool liquidity farming. We ran 98%/2% pools; so 98% was $MANA and 2% $DG, and 98% $DAI, 2% $DG. That meant people didn’t need to lock up as much $DG to get all these rewards. Running these for two weeks to spark interest would have been fine, but we were planning on 40 weeks! The community saw immediately that it was causing too much inflation, so we acted fast to change it. We were able to shift the pools to Uniswap, which was 50/50–50%$ DG, 50% $ETH, which meant people were much more invested and aligned with the success of Decentral Games. That first proposal passed with 99% voting yes.

The DAO is essentially acting as an asset management entity, with the casino feeding the DAO’s balance sheet.

What was the most significant vote?

The first time we allocated funds from the game play treasury was a milestone. It was activated once the treasury hit $1M, which we achieved within the first two months, beating our initial expectations! The first proposal to allocate funds designated 22.5% for Uniswap LPs, so the DAO moved 150K DAI into ETH, paired it with $DG and provided liquidity into our Uniswap pool. The idea was that, over time, people could decrease rewards for the Uniswap pool and make the DAO the main LP in the Uniswap pool, thereby reducing inflation.

What’s on the docket now?

Right now, the DAO is deciding what we want to do for DAI yield, as we allocated another 150K DAI for yield generation. There’s a debate on whether we want to use Aave or a Curve pool.

The DAO is essentially acting as an asset management entity, with the casino feeding the DAO’s balance sheet. As it expands, we hope to direct the pool of funds towards metaverse expansion and development.

I believe that any DAO built around a product that generates money will engage people…people like to be looped into decisions around making money!

Have there been any significant votes on casino development?

Not really, because our focus has been on optimizing our current casinos. In the future, there will be votes around new venues and casinos.

At a high level, why is DG’s governance project so monumental? Are other founders coming to you for advice on DAO structures?

Since the $DG token launch, we have seen a massive increase in participation, showing that offering users ownership in the network drives up engagement. I believe a lot of other projects will explore this model, and I have been approached by other founders.

Our DAO is monumental in being the first to monetize land, and NFTs more broadly. I believe that any DAO built around a product that generates money will engage people…people like to be looped into decisions around money!

What is your biggest fear from a governance standpoint?

An initial concern was that someone could buy up $DG and assert their dominance in the governance realm, but our large holders have been very good community members — each bringing a varied, valuable perspective. We’re fortunate. Even though everyone may not agree on certain proposals and ways to manage the protocol, they are united in wanting to strengthen $DG and the ecosystem.

How much of your time is spent on DAO-related matters?

80% of my time is the core business — developing the product and events. The other 20% is on the DAO. I would expect that to go down as it matures, and I’d love for it to eventually be fully autonomous, and I would just be like any other token holder who gets to vote.

Are there any noteworthy governance tools or services?

Snapshot is a great tool that we and many other leading projects use for off-chain voting, but there are so many tools that could help us. We would love to have a dependable tool for reporting, templates for proposals, and standard guidelines for voting. Right now, we are building a lot of things from scratch, so better governance tools would save us time and resources.

What does Decentral Games need to get right in the next 3–6 months?

Our focus is two-fold. First, we will keep scaling the games and events that have a winning formula — profitable for DG and fun for users. Our events are always a hit; we have live DJ performances and the community loves socializing. We are also working closely with Decentraland to increase capacity, so more users can be packed into one space.

On the gaming side, our objective is to keep players in the casino for longer. Right now, the median playing time per session is 15–20 minutes. We’re hopeful that poker will make an impact here; after 15 minutes, roulette and blackjack become repetitive if you’re playing alone. Poker is player-versus-player and there is generally a much more social and competitive atmosphere. Our goal is for the average session to last 1–2 hours, so the casino will stay full — which will also create a flywheel effect in keeping players engaged.

You became the first metaverse employer recently!

Yes — we have 15 casino hosts that take shifts in the casinos playing with newcomers and answering any questions they have. We’re still hiring!

If you are interested in becoming a $DG host, get in touch on Discord.

Want to learn more about Decentral Games? Subscribe to receive their weekly community newsletter and follow them on Twitter at @DecentralGames.

Looking to go full-time crypto? DCG companies are collectively hiring for 2000+ roles. You can search them at jobs.dcg.co

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With crypto market whiplash strong as ever, “so much is happening!” often echoes in virtual halls. We prefer “so much is being built!”

Mental models are useful for taking stock of the building. They also help early-stage investors to map industry progress to their portfolio’s strategy and outlook. Here’s our three-layered model of the decentralized web:

How The Decentralized Stack Has Grown

Settlement Layer: a year of ossification

2020 cemented Ethereum’s transactional settlement layer dominance. There are more than 3,000 decentralized applications currently running on the Ethereum blockchain — more than 10 times the amount on the next most app-trafficked chain. Eth2 upgrades to scalability, layer-2’s, and UX, and stronger network effects, may further entrench Ethereum’s dominance.

With better middleware solutions, developers plug secure, quality building blocks into their apps, ship them faster, and can focus on delivering superior user experiences.

Middleware Layer: a year of experimentation and growth

2020 saw a surge in the depth and strength of middleware projects, which sit atop the settlement layer, serve as data and interoperability bridges, and support app development. This is typical of maturing industries; they become less vertically integrated, as specialized service providers enter markets and make them more efficient. Starting a business becomes faster, and scaling it becomes easier with these new “lego-like” components. With specialized technologies starting to pave the way for richer end-apps, a golden age of Web 3.0 middleware feels fast upon us. Of the thirteen new investments we have made in 2H20–1Q21, seven are in the decentralized web middleware layer.

API3 is a middleware protocol that allows decentralized applications to access off-chain, real-world data. Think DeFi borrowing and lending apps that need the market price of an asset to settle contracts or games that sync with pro athlete stats. While other projects have successfully bridged data and blockchains, API3’s novel approach improves the experience for developers and data API providers. “Oracles” are the mechanism by which external data reaches blockchains. Historically, they only worked with third-party middlemen running nodes to connect them into DApp smart contracts. API3 lets data providers connect into DApps directly by running an “Airnode” — a serverless, lighter-touch oracle node. With the middlemen gone, they retain full control of their data. Data flows are easier and more trustworthy, which is great for app developers.

Another middleware solution we are excited about is Ceramic Network, which makes distributed data and identity readily available to app developers. Any app that pulls user information from different web sources, and syncs user identities across devices needs a data solution. For example, when you connect to a MetaMask wallet, it shows your information like account names, contact lists, past transactions, settings, token watch lists and more. Apps like MetaMask need to access cross-platform user data, but they (and we users!) don’t want it stored on centralized servers. Enter Ceramic: an identity graph that developers can easily tap into, allowing users to effectively take their identity with them across a decentralized web free of data vaults.

In the past, developers ran their own nodes and data queries, and created their own identity solutions. That sucked valuable building time and led to inconsistent, or sloppy, end-products. With better middleware solutions, developers plug secure, quality building blocks into their apps, ship them faster, and can focus on delivering superior user experiences.

If 2021 is the golden age of middleware, it’s likely to represent an inflection point in DeFi’s push mainstream.

Interface Layer: still early days

There are few winning interface companies today. The Netscape or Ask Jeeves browsers of the 90s, which are likely to elicit grimaces now, weren’t hideous interfaces because the designers had no taste — they were derived from an underdeveloped middleware layer. As the decentralized web plumbing improves, UX-friendly, sophisticated interfaces will emerge to take DeFi and DApps mainstream.

Our challenge as investors is to find the interface companies that will most effectively absorb middleware developments. We invested in Slingshot, a smart order router for DeFi, which is accessible via a UX-friendly front-end and API, because we believe the business and team, which is at the bleeding edge of DeFi, can incorporate new middleware better than most. As the settlement layer scales, and the middleware improves, Slingshot’s functionality will evolve — perhaps beyond its current interface’s recognition.

As the middleware expands, leading hosted and hardware wallets, like Luno and Ledger, and portfolio management tools, like Zerion, will be tested to apply their UX and product development expertise to tap new higher-order functionalities.

If 2021 is the golden age of middleware, it’s likely to represent an inflection point in DeFi’s push mainstream. After developers toiled for years with only HTML, the leap from CSS to flash and the modern web frameworks ushering in Web 2.0’s heyday was fast. A similar acceleration would be a gamechanger for developers, users, and next-gen interface entrepreneurs.

Looking to go full-time crypto? DCG companies are collectively hiring for 2000+ roles. You can search them at jobs.dcg.co

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DCG is not new to digital asset investing, but, over the past couple of years, we have significantly expanded our investment activity in companies, tokens, and funds to solidify our position at the epicenter of the industry.

We are making two critical hires: (1) a Fundamental Analyst to assess market trends and individual opportunities and (2) a Quantitative Analyst to build robust investment systems. Apply now if you’re interested!

In this interview, Matt Beck, our Director, Investments, tells us about the world-class investment engine his team is building.

Matt Beck joined the DCG team in 2020 after four years of helping to build its subsidiary, Grayscale Investments. As Director of Investments, Matt focuses on portfolio and risk management for DCG’s digital currency investment strategies, as well as new opportunities in public and private equity markets. Having worked at MSCI, Bridgewater Associates, and most recently, Grayscale, Matt is a seasoned asset management professional with a decade of experience in multi-asset class investing.

Tell us about what you are building.

Our goal is clear and ambitious: To build the optimal portfolio investing across the full opportunity set within the digital asset ecosystem. DCG’s unique position in the industry provides unparalleled market insights and data. Now, our challenge is to translate that information into sustainable value creation for decades to come.

We’ll do that through a systematic investment engine that processes information faster, more comprehensively, and with a deeper fundamental understanding than other market participants. Together, our people, data, insights, and systems inform high-conviction investment decisions across digital assets, public and private markets, and other strategic opportunities.

What is your investment approach?

We combine a bottom-up, fundamental, and a top-down, quantitative approach to investing.

We start by identifying the most critical set of risk and return drivers across the asset class, and within digital asset networks and businesses themselves. We then translate that fundamental understanding of the digital asset markets into codified logic that helps to systematize investment decisions.

From there, we evaluate a series of top-down, global factors that extend far beyond the digital asset ecosystem to understand what is happening in other markets and asset classes around the world and assess the interplay between them.

And finally, we package this all in a target portfolio allocation framework — so that any active deviations from our target policy are justified by some unique edge we believe we have.

What is your performance benchmark?

Our goal is to outperform Bitcoin in every year. If we can outperform Bitcoin in bull markets, and protect capital in down cycles, we will compound wealth and returns significantly faster. If we are successful, we can build a better financial system by continuously reinvesting our excess returns in this paradigm-shifting asset class.

Our goal is to set the professional standard for sustainable, value-creating investment strategies in this new asset class for many years to come.

With six wholly-owned subsidiaries (Genesis, Grayscale, Coindesk, Foundry, Luno, plus one in stealth mode) that provide critical digital asset market infrastructure and a 150+ company venture portfolio, we hold a unique position in this ecosystem that affords us extremely valuable information and data. We also understand the value-add of our subsidiaries’ and portfolio companies’ products and services, and are well-positioned to leverage their support to scale our investment operations. That’s an amazing competitive edge.

Moreover, in less efficient markets, where dislocations are more pronounced, data is king. It took decades for equity and bond markets to mature. The rate of understanding should be faster here, but we believe there will be inefficiencies to capture for years to come as investors grapple with how to accurately price these projects and markets. We’re playing the long game in the fastest moving and most exciting asset class in the world.

If you like to experiment, rigorously test hypotheses, tinker, compound your learning, and challenge yourself everyday…that’s what we’re doing at DCG.

Words to share with interested candidates?

Our goal is to set the professional standard for sustainable, value-creating investment strategies in this new asset class. I’m here because I think that’s an amazingly worthwhile endeavor and a chance to be at the forefront of pioneering something special. We’re just getting started and the market is still so nascent, that our team is operating with a true blank slate. If you are a high-integrity person that likes to experiment, rigorously test hypotheses, tinker, compound your learning, and challenge yourself everyday…that’s what we’re doing at DCG.

Where is the team a year from now?

Our Fundamental Analyst is deep in the weeds assessing next-generation projects and market factors, coming up with original ways of viewing these protocols that no one else has yet. Our Quantitative Analyst has taken that understanding and encoded signals to focus on the most promising investment opportunities. The team is growing because people want to come and work on one of the most exciting challenges in the space with an incredibly talented group that has proven success.

We aspire to be the world leader in building an institutional-grade portfolio for the crypto ecosystem. Generating alpha is no easy feat; doing so sustainably at scale will take a lot more brainpower and diverse expertise. But it’s an incredibly exciting mission to be on and we welcome passionate, purpose-driven investors to join us.

How to Apply

Please apply to the Fundamental Analyst and Quantitative Analyst positions.

We are reviewing applications and conducting interviews on a rolling basis — so please act quickly if you are interested and tag candidates that you think would be a fit in the comments!

We concluded 2019 with our second annual survey, polling the founders and CEOs of our more than 130 active portfolio companies on a range of topics and trends.

By sharing insight into these executives’ accomplishments, challenges, goals, and expectations, we aim to provide a snapshot of the state of the digital asset market and blockchain ecosystem. As this survey matures, it will serve a dual purpose: identify material shifts in sentiment and chronicle the progression of this fast-moving industry.

One prominent theme across our findings is that the next wave of blockchain adoption and growth depends on the emergence of compelling use cases — as opposed to overcoming regulatory challenges or accessing greater amounts of capital.

Q: What is public enemy #1 for digital currencies & blockchain?

This is a change from last year’s survey results, when 53% of respondents characterized the regulatory environment as “public enemy #1,” and a majority cited regulatory uncertainty as their main operating challenge. Our last survey followed Facebook’s Libra Announcement and the industry was on alert for increased regulatory scrutiny.

REGULATORY PROGRESS

The industry made some progress with global regulators in 2019. Chinese regulation remains volatile, but President Xi Jinping called for prudent oversight to support blockchain development and delivered stablecoins a boost, with the People’s Bank of China announcing the development of a digital yuan. In Europe, France is piloting a central bank digital currency (CBDC) and announced that crypto-crypto trades were no longer taxable, while the German government gave banks its blessing to serve crypto companies. In total, about 50 countries are exploring some form of digital currency.

In the US, results were mixed: President Trump, Treasury Secretary Mnuchin, and Fed Chairman Powell all discussed bitcoin (albeit in a mostly negative light), while key Congressional leaders debated the utility of digital currencies and blockchain technology. The SEC provided additional insight on digital currencies; however, most industry observers were unhappy with the guidance.

Our portfolio company executives suggested that, as regulation stands today, the regulator is often a scapegoat for other business shortcomings. Astyanax Kanakakis, founder of Norbloc, a Stockholm-based KYC data platform for banks, reflected on his company’s experience, “once we proved the product-market fit and our banking partners realized value, the regulator was positive on the application of blockchain technology to regulated data sharing. Many people who say the regulator is the biggest problem (incorrectly) assume product-market fit.”

BANKING & ADVERTISING CHALLENGES

Many crypto exchanges and payment companies still struggle to open or maintain bank accounts, even where it’s sanctioned by the regulator. “With the absence of clear regulatory guidelines in some markets, banks have become the de-facto regulators of the crypto industry,” said Marcus Swanepoel, CEO of Luno, a cryptocurrency platform in Africa, Europe, and Asia. Many banks are de-risking across their businesses and associate crypto companies with money laundering concerns. While those risks exist, blockchain monitoring tools that reduce them — from the likes of Chainalysis and Elliptic — are sometimes misunderstood or underutilized.

Payments companies can circumvent banks, but often at prohibitive costs. Elizabeth Rossiello, CEO of AZA, a corporate payments business based in Africa that requires on and off-ramps in every jurisdiction in which it operates, stated, “using a digital currency broker is faster and more convenient (than banks). But they’re often more expensive, so even though using a bank as a trading counterparty is cumbersome, it can still be cheaper in some corridors, and I’m a businesswoman and I have to go by price.”

Advertising restrictions at large tech firms present another external challenge. During the ICO craze, many platforms such as Google and Facebook banned ads from crypto companies to shield users from scams. While the space has matured and, arguably, self-regulated since then, restrictions persist. Approximately 50% of survey respondents reported that they would advertise on popular platforms if restrictions were lifted, with that number higher for retail-focused businesses that would deploy traditional programmatic advertising campaigns.

FINDING PRODUCT MARKET FIT

“Finding Product-Market Fit” was named by most respondents as both their greatest accomplishment and their biggest challenge in 2019. This echoes the macro-level sentiment — that the industry’s ability to develop compelling, in-demand use cases will determine the next stage of adoption and growth.

Q: LEFT — Your greatest accomplishment this past year was:
Q: RIGHT — Your greatest challenge in this past year was:

Product-market fit is an elusive term. Across the DCG portfolio, we see an iterative process, rarely marked by a single event. However, there are recognizable signs: customers get real value out of the product, which accelerates the sales process, and product usage rises. Indeed, our companies are squarely focused on customers, with 50% of respondents reporting that “customer growth” will most define a successful 2020, compared with product improvements (16%), profitability (12%), pilot success (10%), and monetization (10%).

Tim Rice, CEO of data provider CoinMetrics, explained that, for his business, achieving product-market fit is partly about customers reaching a conclusion organically: “Investors have started to understand that they’d rather get all their crypto-related data from a single source, and we’ve built a platform with all the data they need in one place.”

Do companies pay less attention to the competition when they achieve product-market fit? Not in this nascent space; respondents who reported achieving product-market fit as their greatest accomplishment in 2019 were just as likely as their peers to admit to worrying about competitors.

Q: Do you worry about your competitors?

COMPETITION

Industry competition stabilized over the last year, with less than half of respondents believing competition is on the rise. In contrast, at the end of 2018, two-thirds of survey respondents believed the level of competition was rising.

Q: Is the level of competition in the industry rising or falling?

Some businesses that raised funds at the peak of the crypto bubble exited the space, while stronger ones have gained traction. Additionally, founders have experienced a more challenging fundraising environment, as generalist VCs shied away from the market. Consolidation was also a factor; M&A activity peaked in 2018, with more than 160 deals, before dropping in 2019, to fewer than 100 acquisitions.

Competition varies by vertical. Mike Alfred, CEO of data provider Digital Assets Data, believes the competition has leveled out in the data space, “There were 30 firms making noise in the last bull market and half of those firms are gone. They either went out of business or pivoted to a new market because they realized selling a data platform is still hard. The net result is a smaller and more stable pool of companies going after a growing market.”

​Exchanges and payment firms have also seen competition stabilize, while adjacent businesses are increasingly open for business, resulting in greater partnership opportunities.

Competition has intensified in the security space, across both B2B and B2C solutions. Pascal Gauthier, CEO of Ledger, finds this unsurprising: “security is paramount for the industry, so for every product line we’re seeing a new set of competitors. Some died in the bear market, but many are thriving.”

​Security firms were the darling of crypto investors in 2019. Curv, Anchorage, and Fireblocks raised large rounds, while Coinbase acquired Xapo’s custody business. Competition has also come from outside the industry with large financial institutions — including State Street, ING, and Fidelity — architecting systems in-house.

New products are emerging, particularly around insurance. BitGo, Curv and Anchorage partnered with financial institutions (Lloyd’s of London, Munich Re, and Aon, respectively) to offer insurance coverage to institutional investors, and several exchanges have rolled out insurance products.

The pie is growing fast. Institutions are vying for best-in-class security solutions as they shore up risks before making further investments in digital currencies, while retail customers are also growing more cautious. Hardware wallet usage is rising; Research and Markets, a research consultancy, forecasts a 25% compounded annual growth for hardware wallets between 2020 and 2025 — putting the total market value above $700 million by 2025.

BLOCKCHAIN BEHIND THE SCENES

At a quick glance, several DCG portfolio companies don’t scream blockchain. They operate traditional business models and their marketing materials make little or no mention of decentralized technology. We count among these businesses some of our most compelling investments.

OXIO is a New York-headquartered firm aiming to create a decentralized marketplace for mobile connectivity. That is an ambitious goal in the telecom industry which has historically been slow to embrace change. Rather than deploy a “build it and they will come” approach, OXIO has moved incrementally, launching as a wireless connectivity wholesaler (an MVNO).

Wireless connectivity is converted into vouchers which are re-sold and tracked on the Stellar blockchain, but OXIO founder Jason Evans says that his business’s blockchain underpinning is shared on a need-to-know basis: “early on we talked about it more, but it just clouded the story. CRM salespeople talk about the product and only if it’s relevant they’ll mention it’s built out on AWS. It’s about ‘what’s your product and why do I care.’”

Figure has also taken a measured approach to building Provenance, a decentralized marketplace for financial loans, which uses the Hash token. To the outside world, the company is best-known as a newcomer to home equity lending. To us, it’s the first lender to execute and securitize loans on Provenance. With $1 billion in loans, Figure successfully attracted a top-ten mortgage provider (Caliber) to Provenance, with more lenders in the pipeline.

Decent provides health insurance to self-employed individuals and uses blockchain to expedite many of the back-office functions that drive the industry’s mounting costs. Founder Nick Soman is excited about the potential for ‘blockchain behind the scenes’ solutions: “our expectation was always that blockchain would make the health insurance industry more efficient by tackling boring back-office tasks. Sometimes it’s programmable money to release payments quicker or when payment terms are met, but it’s not about creating new activities.”

As we look across the DCG portfolio, promising B2B use cases are often “boring” — solutions to automate routine operations or ensure compliance and data irregularities are caught. It’s no secret that B2B businesses must increase revenues or decrease costs for clients, but the sentiment from executives is overwhelmingly that decreasing costs is an easier sell for blockchain B2B businesses.

BLOCKCHAIN BEYOND BUZZWORDS: PERCENT OF TOTAL DCG INVESTMENTS (NEW AND FOLLOW-ONS) BY YEAR WHOSE NAMES DO NOT INCLUDE “BIT, CRYPTO, BLOCK, COIN OR CHAIN”

THE HUNT FOR THE BEST USE CASES

The challenge for the industry in 2020 and beyond is proving compelling use cases where the technology generates value — beyond what legacy systems offer.

Q: What do you view as the biggest opportunity for blockchain?

While executives named the same top-three use cases as the biggest opportunities going into 2019, responses were more dispersed in this year’s survey. Payment use cases are losing some of their luster; one-fifth of respondents named them as the most exciting applications in this year’s survey, down from one-third of respondents a year earlier.

Executives consistently express that use cases which remove friction to improve existing behaviors are more promising in the near-term than use cases intended to produce new behaviors.

In keeping with that view, within payment solutions, respondents are bullish on remittances and clearing and settlement solutions, and less optimistic about efforts to make digital currencies a medium of exchange.

Gaming is a consumer use case that plays into existing behaviors. Lucid Sight is a blockchain-based game developer that uses top-notch IP — its MLB Champions game is supported by Major League Baseball — to reach traditional gaming audiences. Blockchain can provide a unique marketplace function, where users can store and trade in-game assets and, eventually, sell them on exchanges, like OpenSeas.

Lucid Sight co-founder Octavio Herrera says that the technology solved a key problem for gamers: “(they) have always wanted to transact with one another, but they’ve been forced into grey or black markets. We saw that the ledger for peer-to-peer transactions could be applied to the world of gaming.”

For digital currencies, the long-term vision remains undaunted. 60% of the founders we surveyed cite trustless financial systems as the biggest opportunity for digital currencies, followed by borderless payment networks.

Q: What do you view as the biggest opportunity for digital currencies?

“Trustlessness” implies the absence of a central authority dictating the flow of money, but founders highlighted other markers that are gaining steady, tangible traction, including cheaper movement of value, cheaper and easier compliance measures, and wider financial access. Many view unreliable monetary policy and currency swings in emerging markets as key tailwinds.

The stablecoin market continued to grow in 2019. Michael Moro, CEO of Genesis, affirmed this trend, “as more exchanges and OTC trading firms adopted stablecoins throughout 2019, borrowing demand for USDT/USDC/PAX saw a corresponding increase. Those three stablecoins comprised nearly 12% of the Genesis loan portfolio at year-end 2019, compared to less than 1% a year prior.” Executives view this development positively. In attracting new audiences who psychologically accept ‘digital money’ more readily than ‘decentralized currencies’, stablecoins can play an onboarding role for the wider industry.

INFRASTRUCTURE & GEOGRAPHICAL DEVELOPMENT

Survey respondents expect it will take 3–5 years for the industry’s infrastructure to mature to the point required for mass adoption.

Q: How long will it take for the infrastructure to mature?

We identified three main obstacles to maturity: scalability, security, and education. Respondents caution that education may take the longest, with technical challenges potentially overcome in 2–4 years.​

On the topic of scalability, several executives invoked CryptoKitties, the blockbuster game that jammed the Ethereum blockchain in late 2017. A cautionary tale on what happens when demand outpaces scale, the experience has been formative for the industry in spurring improvement.​

To solve for the challenges that they encountered, Dapper Labs, the creators of CryptoKitties, launched the Flow platform in 2019, which improves scalability by reducing redundant work. Instead of every node storing the entire state of the blockchain and performing the work associated with each transaction, Flow effectively spreads the work across multiple nodes.

Founders are excited about the potential for the Lightning Network and other “Layer 2” solutions to accelerate transaction speed and enable more sophisticated apps in the next few years.

Survey respondents noted that infrastructure deficiencies constrain consumer adoption more than enterprise adoption, which is delayed by lengthy sales cycles that are further extended in projects involving multiple participants.

Q: In what area of the world do you see the most development in blockchain and digital currencies?

For the first time, an overwhelming majority of survey respondents named Asia as the epicenter of industry development — today and five years into the future.

​Executives attributed the shift to an array of attractive market dynamics including capital controls fueling interest in digital currencies, supportive regulations, and top-down decision-making structures which may accelerate enterprise adoption. Outside of Binance’s global presence, APAC-based blockchain businesses or product innovations were not cited as a reason for the region eclipsing North America as the land of blockchain opportunity.

LOOKING AHEAD

Roughly 60% of our executives plan to raise capital in 2020. Product development is where capital is most needed, followed by team growth and marketing and sales budgets. This is already reflected in job openings; as of the end of January, our companies were hiring for 130 marketing, sales, and business development roles, compared with 45 posts for those functions a year earlier.

Elevated Bitcoin prices have historically boded well for venture investments in the space, and the outlook looks positive on that front. As the Bitcoin halving looms, we asked the group whether they believed it was fully reflected in BTC prices. Only one-third of survey respondents think the halving is priced in, while 46% believe the currency to be undervalued and 23% hold a neutral outlook.

Investor demand is coming from diverse sources — institutional appetite holds steady, while younger audiences appear highly receptive to digital currencies. According to Charles Schwab data for 3Q19, the Grayscale Bitcoin Trust was the fifth-largest equity holding in millennials’ self-directed brokerage accounts (SDBAs), following shares in Amazon, Apple, Tesla and Facebook.

Q: Is the BTC halving fully priced in?

Looking back, our founders were conservative in their forecasts for 2019, with 54% of respondents rating the outlook for digital currency prices in as “Pessimistic” or “Neutral” at the start of the year. The bitcoin price ended 2019 88% up.

FINAL THOUGHTS

At DCG, we provide capital and a robust community for our portfolio companies to help them navigate the challenges of operating in a nascent space. We routinely gather our executives, in virtual and in-person sessions, to tackle shared concerns and trends — many of which were highlighted in this survey.

We also recognize our responsibility to reach beyond our network, and that’s why we have a renewed commitment in 2020 to harness our executives’ insights, and our own learnings, and share them with the world outside DCG.

As we reflect on 2019, we recall the start of the year. The price of bitcoin was ~$3,740, capital was sparse, and sentiment was bearish. But there was also a sense of opportunity — that 2019 presented a test; companies that could succeed through another down-cycle would prove our industry’s staying power. Many DCG portfolio companies passed that test. We look to 2020 with a renewed sense of opportunity. The digital currency price outlook is stronger, setting the stage for increased investor interest, and our companies have done the hard work. They’ve built capable teams and well-run businesses that are poised to thrive in a supportive environment. We’re more confident than ever about the long-term prospects for this industry.

As the COVID-19 crisis swept the US , Decent’s customer signups surged and its value proposition — aligning patient, doctor and provider incentives — came into focus. In this feature, we bring you an interview with Decent’s Founder & CEO, Nick Soman.

Tell us about your background and the problem you’re solving.

I’m a serial founder and entrepreneur, and I’m the only one in my family who’s not a doctor. My parents were both family doctors for more than 30 years, and then joined the leadership of a big HMO. We’re building “Medicare for All” because we think the government won’t. Our current healthcare system is on the brink of collapse, largely because traditional insurance companies are built on a web of perverse incentives. For their revenues to rise, they must increase their rates, and justify them with climbing care costs. That incentive-alignment problem is what we’ve set out to solve.

More than 90% of large companies follow a self-insurance model. But, until us, no one took that model — with its benefits to employers and members — and extended it to small businesses and independents. Our plans all include unlimited primary care with a personal doctor, and they’re 35% cheaper than comparable coverage.

How are you able to offer affordable plans?

When doctors conduct unnecessary tests or recommend poor value-for-money procedures, it’s because they’re incentivized to do so. At Decent, we work with independent direct primary care doctors who don’t have existing fealty to outside systems or HMOs. These are doctors who have grown so exasperated with the “fee for service” medical system that they’ve spun out their own practices and charge patients a fixed monthly fee for unlimited access. That’s the first way this model aligns incentives — our doctors want to keep their patients healthy and out of their offices.

Then, there’s the way we approach specialty care, which normally accounts for 90% of health plan costs. By giving members more primary, preemptive care, we expect to catch problems earlier, so they’re less expensive to treat later. We also control “steerage,” which is the process by which patients are referred for specialty care. We control costs by routing members to the most cost-effective solutions. That doesn’t mean pushing “cheap” treatments; it means referring members to specialist providers with demonstrated commitments to delivering high value-for-money care. Unlike traditional insurance models, that make money when care is costlier, we’re able to say, “Decent makes more money when we save people money.”

“Insurance turns out to be one of the better blockchain enterprise use cases.”

Can you tell us more about your members?

We’re currently the most affordable comprehensive option for anyone in Austin, Texas, who doesn’t get government subsidies. For our initial entry into the market, we’re serving a relatively healthy and affluent population, because the alternative was to become a traditional health company, with all those perverse incentives we set out to avoid.

“We have an opportunity to be stewards of our health in a way that’s impossible in the current adversarial system.”

What do you say to people who dismiss universal coverage as unrealistic or too expensive?

If incentives are properly aligned, it won’t be. We make money when we save members money, and we can do that in only two ways: helping them find more cost-effective healthcare or reducing overhead charges. Every incremental dollar we can squeeze out, we aim to return to the member.

The ‘blue sky’ for Decent is for people to become partial owners in the company, unlocking true incentive alignment. My hope is that, in two years, members get an email saying,“We have exciting policy changes to announce; we’re open sourcing all our pricing quality data, and if you make smart choices, we’ll reward you — not just with cash, but with ownership in Decent.” We have an opportunity to be stewards of our health in a way that’s impossible in the current adversarial system.

Is that where blockchain comes in?

Yes, in aligning interests! I was so uncool when I talked about blockchain in 2018 (seed raise) and I was uncool this time around too. In 2018, investors’ eyes glazed over when I said, “This technology can make boring back-end processes less expensive,” when other founders were pitching a new global financial system. This time, it was uncool because enterprise blockchain applications have disappointed. But we’ve actually done it! We built a system on the Ethereum blockchain that will reward users for making smart health choices. If you get a cost-effective MRI, we can give you a cut of the savings that choice generates for the system. If you complete a tutorial on our primary care model, we’ll give you $20 that can be used to pay down your premiums.

Blockchain is allowing us to build a system to transfer money when value-add conditions are met. The technology will also allow us to pay doctors faster and add price transparency to healthcare. Insurance turns out to be one of the better blockchain enterprise use cases.

Let’s discuss the COVID-19 impact on your business. What’s it been like since the news and closures set in?

Our off-cycle signups tripled when COVID-19 hit the news. People are afraid and reassessing whether they can really take the risk of being uninsured, and Texas has the largest uninsured population in the country. For context, traditional insurance companies can only sell to the public for 45 days of the year, in open enrollment periods for the individual market. There are also special enrollment periods for those who have lost jobs or moved, but outside of special enrollments, we’re the only plan people can buy year-around. That’s a function of how we’re set up; in the same way self-insured large companies can routinely add new employees to their plans, we can always onboard customers.

How have you responded to the surge in demand?

First, we recognized our responsibility to our community. We bought masks for first responders in Austin, waived COVID testing costs and extended the grace period for payments, because we’re mindful that people are hard-up right now. In terms of scaling up our operations to meet this demand— we’re hiring!

We realize that we need to scale faster than may feel comfortable. I would rather us struggle and push ourselves harder to be of service to as many people as we can at this time.

“America needs Decent. If our country doesn’t fix healthcare quickly, it gets easier to be me, in a way that should concern traditional insurers.”

How has this experience affected your vision for Decent?

I believe we’ll have an opportunity to expand across Texas and elsewhere quicker than previously anticipated. It’s certainly reinforced our model. Take telemedicine; even before this crisis, over 60% of our members chose to get most of their primary care delivered virtually, through phone or computer. This was a way for us to lower premiums, but it was also a solution for people who live far from doctors or don’t want to risk being exposed to sick people in waiting rooms. Many plans have offered telemedicine, but it’s been a cornerstone of our model since the outset.

This crisis has also magnified the sad truth, that insurance companies can’t outrun their own perverse financial incentives — which is driving the total collapse of our healthcare system. People are open to new ways of thinking and they’re not as blinded by the insurance lobby, which is the country’s second-biggest (by political spend). I used to think it would take time to prove our model and win the right to take it to more states. If the data continues to look as it does, this ought to be a model we can extend everywhere much faster. America needs Decent. If our country doesn’t fix healthcare quickly, it gets easier to be me, in a way that should concern traditional insurers.

How do you keep that fire to keep developing and innovating alive?

Innovation is valuable to the extent it helps you solve a problem. We absolutely don’t innovate for innovation sake. In fact, we fear it. We can’t afford to make mistakes with people’s health care and data. It makes sense to build things on blockchain if, and only if, it’s the most cost-effective way to deliver value back to customers. The reward service is the first blockchain element we built, and, it’s happening in the backend. Customers never see the words “blockchain” or “Ethereum”. They just know that they’re financially rewarded for making smart health choices.

What does Decent absolutely need to get right in the next quarter and year?

We need to turn stakeholders into champions. Take the doctors in our network; we’re seeing them buy Decent insurance for themselves and their families. We’re seeing our members share positive reviews online, and our Net Promoter Score is 73 vs. an industry average of 14. At the start, we were convincing people to trust this new company with no online footprint, and now, we’re seeing traction. People are valuing the experience and understanding our mission; they get why it’s important that we align incentives and commit to offering a service free from ‘dark corners’, and championing that message.

We increase our investments in companies when they do what they say they will, their prospects are strong or improved, and the growth capital will be put to good use. We’re excited to continue to back Nick and the Decent team as they work in overdrive to make the most of this opportunity to serve.

Want to learn more about Decent? Read their latest news and thinking and follow them on Twitter at @Decent.

Ready to join a team on a bold mission? Decent and 100+ other DCG companies are actively hiring. You can search open roles at jobs.dcg.co

Foundry was publicly announced as DCG’s fourth wholly-owned subsidiary business today — August 27th, 2020. Behind the scenes, CEO Mike Colyer has been quietly building this business from the ground up for close to a year. He now leads a team of 8, the company has issued tens of millions of dollars in equipment financing, and has helped to procure nearly half of the mining equipment sold in North America this year. He’ll tell you the rest in this Q&A session!

Tell us how you got into crypto.

I got into crypto in 2017, right before the last big bull run. I discovered blockchain technology and went down the rabbit hole, spending hours a day researching it. It felt like the dawn of the internet, which was when I was in college in the 90s. I realized that blockchain could be as impactful, and address a lot of what’s imperfect about the internet today. It can drive tremendous efficiency and connect the world in new ways. I spent much of my career in the “old world” — manufacturing, distribution, operating and turning around businesses. The sort of ‘aha moment’ I was experiencing doesn’t happen much in a lifetime, so I decided to go for it and take a chance on this new world.

I fell in love with the mining aspect and building out the ecosystem infrastructure. Plus, I live in Western New York. It’s cold (fine, frigid!) and has cheap hydro-power. I thought, “when was the last time Western NY had an advantage in anything?!” So, I jumped into the mining space, and it’s been a wild ride since.

How did Foundry get its start and what’s the problem you’re setting out to solve?

After that initial leap into the mining space, I worked with a local company here (in Rochester) and then joined Core Scientific, helping them scale up to be a large enterprise miner. I met Barry (Silbert) about a year ago. He had avoided the mining space for many years because it is opaque and challenging to navigate, but was eager to enter, in order to bring more transparency and trust to this area.

The goal isn’t for the US to have a dominant position, but to spread the network around the globe.

Foundry’s tagline is “Empowering a Decentralized Infrastructure.” Why is it important to decentralize the hash rate? Are we too reliant on the Chinese market?

China has gained a significant foothold on the industry. Most machines are made there, and many of the largest miners, hosting facilities and mining pools are based there. We believe that for Bitcoin to survive and thrive over the long-term, it needs to be decentralized. China’s rapid growth has, in some ways, been great for the industry’s innovation and development. But, other places have strategic advantages too, and, with greater market understanding, they can catch up. The goal isn’t for the US to have a dominant position, but to spread the network around the globe. To us, it’s about balance — supporting the development of a truly decentralized, and thus more enduring, global industry.

How will being part of the DCG family help Foundry to execute on its goals?

DCG has an amazing reputation in the market. Its institutional expertise, long-term capital, and market intelligence are key differentiators in a mining space that is still somewhat underdeveloped and obscure. I’ve spent tons of time trying to figure out who’s real and who’s not — and many others face similar ‘working through the weeds’ challenges. They want a dependable, professional shop to turn to as a long-term partner.

From the start, Barry impressed upon me that we aren’t building a business for 6–12 months, but must think in terms of decades, 10–20 years out. Having a longer-term vision, and the foundation to patiently execute on it, is powerful in mining.

As experienced, active miners — we have machines spread across North America — we know firsthand the challenges and pitfalls these businesses face.

Foundry is launching with three core services — tell us about them.

We looked at the ecosystem and considered how we could add the most value in empowering decentralized networks. While the mining market has matured considerably in recent years, miners still have weak access to capital. So, the first product we brought to market was equipment financing. Some of our clients are building out operations; others are replacing obsolete machines. Because we appreciate their cash constraints and we’re in this business for the long-run, miners can use only the machines themselves as loan collateral. Our mining experience and strong relationships with the leading manufacturers in the space help here. We’re not just handing clients a check; we help them vet and procure the right equipment for their operations.

Second, we offer advisory and consulting services for individuals and organizations interested in entering the mining space, or expanding or optimizing their operations. As experienced, active miners — we have machines spread across North America — we know firsthand the challenges and pitfalls these businesses face. I’ve definitely stepped in many of them over the last three years, so we’re channeling the learnings to help our clients accelerate their growth.

The third business line, Foundry Labs, focuses on staking. We help different protocols set up nodes and do staking. We leverage DCG’s resources here. DCG has backed a lot of different companies and tokens across the space, and we’re now able to create the infrastructure to support them.

Outside of crypto investors and companies, what types of clients seek your advisory services?

As the mining space has matured, different types of organizations are taking note. We’re receiving inbound requests from energy companies sitting on a significant source and realizing they can potentially monetize it by setting up Bitcoin mining operations. Longer-term, we expect government agencies to participate in this market, too. If a country has a competitive advantage in cheap electricity, Bitcoin mining is a way for them to capitalize on it and diversify their economies.

You must be willing to make decisions quickly and, as with all shrewd investing, act counter-cyclically.

You’ve been at this for about a year now — what’s been surprising as you’ve kicked off the business?

How awesome working with the DCG team is!

The crypto space moves extremely fast and that’s certainly true of mining, too. You must be willing to make decisions quickly and, as with all shrewd investing, act counter-cyclically. If you’re able to do that, mining crypto can be a great business. What’s surprised me most is when experienced miners, that have been through cycles, are hesitant to act, then six months later, regret delaying a decision. You expect those in the space to be as fast-charging as the overall tempo feels.

When it comes to your relationship with clients, how is providing equipment financing different than selling the equipment?

Our incentives are aligned; we’re investing alongside our clients. If we didn’t think it was a good time for our clients to scale their mining operations, we wouldn’t provide them with equipment financing. Our goals is to help miners be successful long term, which means providing them with the tools and resources to make the right decisions along the way. We are trusted partners, not vendors.

What does success look like for Foundry?

Short-term, we have to smartly deploy $100M. Longer-term, success is North America’s share of global hashrate rising, contributing to a more decentralized and secure Bitcoin mining network. Foundry will have played a critical role in making that a reality!

Want to know the latest from Foundry? Follow them on Twitter at @foundryservices and check out the website for more information and getting in touch with the team!

Want to join Foundry? They’re hiring! Check out open roles and apply!

Sometime in late 2019, our newsletter subscribers stopped hearing from us. Our analytics suggested most of them probably didn’t notice. If weak engagement is the symptom of a newsletter in decline, the leading causes are tedious content, poor execution, and misunderstood audiences. Our diagnosis was that we lost touch with why we were writing in the first place.

After a cooling off period, we turned a new page, with one question to answer, “what do our subscribers want to hear from us?”

Here’s what we’ve come up with:

We’ll talk about what we know. As the most active investor in the crypto industry, with more than 160 portfolio companies, we’ll relay active views and observations. We’ll share details on projects and companies we’re excited about, unpack data and trends across our portfolio, discuss challenges our companies face, unveil our new undertakings, and reflect on the industry developments causing waves at DCG HQ. If we leave our strike zone, or regurgitate something you’re getting elsewhere, we’ve missed the mark. Kindly unsubscribe and we’ll take the hint.

We’re not a crypto news digest: Our last newsletter packed in links to external content. We know your time is limited, so we’re returning to basics: we’ll write a note and include a couple noteworthy charts. If you’re after an industry news round-up, subscribe to CoinDesk’s newsletters.

With our previous “Insights” newsletter, we learned the importance of understanding our readers and our place in their inbox. With a renewed commitment to sticking to what we’re doing and seeing, and adding content as you ask for it, we’re excited to announce the launch of DCG Insider.

Want our latest thinking in your inbox? Sign up here.

Real Talk…

We’re going to be open with you. Only 9% of our 122 active portfolio companies are female founded… and just 3% of our total companies are solely led by women.

Though we’re not far off from industry averages, we feel strongly that these numbers should be higher.

To provide full context, Crunchbase reported in 2019 that the total number of VC-backed companies with female founders rose to 17%*, but that only 2% of those companies did not have a male co-founder.

While the gender imbalance in our portfolio is not deliberate, it is common and likely to persist if we don’t do #MoreThanTalk about our desire for a better ratio.

That’s why we’re choosing to make a commitment rather thana marketing campaign this International Women’s Day.

What is #MoreThanTalk?

The idea is simple — We’re committing to give female founders in crypto a direct line to our investments team.

Why is it called #MoreThanTalk?

VCs are always saying that diversity matters and that they want to back more female-led companies, but they rarely do the work of creating the bridges required to bring more women into their networks. We know that we need to do more than talk about our desire for a more diverse portfolio, so we’re taking action and using the hashtag #MoreThanTalk to gently encourage others to do the same.

How Does This Work?

The process is super straightforward.

1. Women entrepreneurs who are seeking funding will submit an “investment request” via the form at morethantalk.co

2. Each submission will be treated like it came through a warm intro (this is key!)

3. After reviewing their submission, our team will reach out to set up a 30 minute call

4. During the call we will provide thoughtful feedback about their product and pitch, and will share next steps for our investments process if it’s a good fit

Can you really guarantee everyone such a high level of attention?

We believe we can. If it’s true that only 5% of crypto-holders are women, and only 17% of the world’s total number of startups are female founded, the number of women building companies in our space is quite small today.

Spending a few hours a week in calls with potential investments in order to grow an under-represented demographic of entrepreneurs seems like a small task.. especially when we think about how their success will create pathways for others. If this becomes overwhelming or we struggle to keep up our end of the arrangement, we’ll reset expectations and revel in the growth that’s occurred!

Love this! How can I help support the initiative?

Referrals
Send this post as a nudge of encouragement to the brilliant women you know who are building (or considering building) companies in the space and tell them that the team at DCG wants to hear from them. *Be sure to remind them that their pitch doesn’t need to be perfect and polished…!

Awareness
So that all of the women in your network are aware of this opportunity, please retweet this tweet or adapt it to share with your followers. You never know who’s working on what behind the scenes.

Encourage Other Investors To Join The Movement
Share this post with crypto VCs you admire and tell them that you think it would be great if they partnered with DCG on this initiative to set up their own “direct line”. The greater the size of the group of participants, the greater the impact. They can email network@dcg.co to get involved.

Details and submission form can be found at https://morethantalk.co/

To keep up to date on initiatives and news coming from Digital Currency Group, visit dcg.co and follow us on Twitter